An up-and-coming software vendor has agreed to pay $3.15 million to settle a federal class action lawsuit. The lawsuit was brought by a man who started working for Tyler Technologies in July 2016 as an “implementation consultant.” He claims he was misclassified as exempt from overtime and was therefore paid a flat salary of about $50,0000 plus incentives, even though he routinely worked more than 40 hours in a week.
The man filed the class action against Tyler in an effort to represent similarly situated employees who were also denied overtime pay. There are 294 such employees, and they will now receive $2.4 million, with the rest going to litigation expenses and legal fees. Each employee will receive a payment of between $200 and over $10,000.
Interestingly, the settlement does not require Tyler to change the classification of these employees. According to court papers, Tyler asserted that the employees are correctly classified as exempt from the federal Fair Labor Standards Act (FLSA), and thus exempt from overtime, because they meet the “administrative exception” to the FLSA.
In order to qualify for the administrative exception, a job must meet all three of the following tests:
- The employee must be paid on a salary or fee basis at a rate of not less than $684 per week
- The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or its customers
- The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance
Here, the questions would be whether the job was “directly related to the management or general business operations” of Tyler or its customers, and whether the employees actually exercised discretion and independent judgment to matters of significance.
Why did Tyler settle the case if it believed it had classified the employees correctly as exempt?
“While Tyler Technologies is confident the employees involved were properly classified, it was in the best interest of our company to resolve this issue without the additional cost and uncertainty of further litigation,” a spokesperson said in an email.
Most employees are entitled to overtime
In California, if you don’t have the authority to hire or fire people, it’s a common sign that you should probably be receiving overtime whenever you work more than 8 hours a day. If you are classified as exempt, it would generally mean you make independent decisions over matters of significance.
If you believe you may deserve overtime pay you are not receiving, talk to an attorney who handles wage and hour issues.
Leigh Law Group handles wage and hour issues and other employment law issues throughout California.